As Chinese Stocks Slump, Analysts Say Buy

Asia Today: Chinese stocks are down this year, but investment-bank analysts are sticking to their "buy" recommendations. Kate O'Keeffe joins Asia Today to explain.

This transcript has been automatically generated and may not be 100% accurate.

go ... Vestas sang on Chinese stocks ... but analysts at investment banks they stood by a lull in the still sign up ... this is Asia's today I'm JD I'm joined by reports that doubt James Keyes was KC Keefe ... Tejas reported extensively on this issue ... it seems that little full support of Chinese stocks but Gannett ... keep saying on a ... Qantas is sold in excess ... of us a cake it's it's ... a pretty complicated picture of ... the law to sites of this I mean basically these analysts are ... paid by investment banks a Salzman objective is to sell stocks ... if you put a sell rating on the stock though ... not a lot of people are going and make use of your report so I mean this is the fundamental economic aspect of it ... on and then also banned ... you know concerns that there's a serious conflict of interest ... um with these analysts were hit the banks because ... their banks and are trying to get ... of banking business and trading business from the companies they cover ... so if they said you know ... me he always come easily about it and then maybe they wanted as much business ... two days of under huge amount of pressure I guess to sustain positive on on these on the Stoxx ... even given or so the problems with its Chinese accounting issues ill or economical ... is the correct ... well it so I mean it's something you would get a look at the services of pressure and wonder why listing Lehrer putting my I didn't encounter any line from the Solso family said yes I was told by a half to beat the stock ... a buy one I didn't want to do and I haven't actually him encountered anything like that ... take that kind of came to the conclusion that it's just more of ... this this is the system you know it's a ... there's just no incentive for these people to rate stocks ... as a so ... um ... and I talked to someone lending I ask you know what what happens if these companies are ... very serious ... on issues of fraud are concerns that there is ... a real problem the company and that ... this this and also the actually and I Kissel open sandals just stop covering it ... you know because they don't need them and a headache then I mean it's it's a deal that so ... um that actually may be a good side and a pair of assists Alicante of the things that seem fewer analysts ... covering a company that maybe that's a little sad that that can be concerns about its image and Joann and among Aussie sell but they will say it will stop covering ... this is the problem specific to the Chinese still so this is how annoyed with a well my Savant standing is like you said sulfide banks I just posted because of all the reasons your outline news is specific to China ... well I think now we're seeing it to exacerbated and ten because that's the hot pot stock market you know ... well actually it hasn't been a lot this year but ... um ... you know in the long-term tenancies huge growth engine of the economy and ... the market will will keep growing even if there is some books on the way I think that's ... the conventional wisdom so ... Umm we saw some land thing happened in the U S back in the late nineties and the tech bubble um ... at the plane actually it was ... you know even worse I'd say because ... that's kind of buy ... recommendations on them for it sells a hundred to one on Chowchilla and isn't as pretty busy um ... I'm not actually ... from said a serious investigation and penalties and ... server restructuring of the system ... not all of this a Chinese wall between the investment banking analysts ... have said the investment bankers and the research analysts in the last ... but um ... we do still see you know ... very few sell recommendations it's it's a bit better than us and I think for us on some stocks ... it's about Spain and how biased every cell ... in China right now it's nineteen Over nineteen bias ... Treviso an attorney ... um it seems crazy when we seen these Chinese don't come off so the fifteen twenty percent I think this is the top ... what more ... fitting any reaction from investors or how to soothe investors also make sense of these reports of the same newbies or they just wouldn't ... read between the lines will choose to the folks that I think ... I think they do know on and I think they actually find other ways of making use of the salsa and research um ... Dale often use this all said research is the axis of a company which is something that is useful to them ... so sometimes even if they're not reading the reports ... they're using their relationship to get their information from the company ... um and in other cases of Solso and also perfectly happy to discuss ... how they really don't ... um on the phone ... but they may not published on the report the Minis has also had to contend with ... compliance with their own bank anemic and ... you know they haven't been able to write you know the outlandish things they may be thinking um ... and the report so ... yet I think it's ... it's a subtle issue you know they're a lot of different ... defend ... the factors at play actually fascination to take ... Casey Keefe Anqi symmetry joining